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8831GEE Group Announces Results for the Fiscal 2020 Second Quarterhttps://ir.geegroup.com/news/detail/150/gee-group-announces-results-for-the-fiscal-2020-second-quarter
Fri, 15 May 2020 19:30:00 -0400https://ir.geegroup.com/news/detail/150/gee-group-announces-results-for-the-fiscal-2020-second-quarterJACKSONVILLE, FL / ACCESSWIRE / May 15, 2020 /GEE Group Inc. (NYSE American:JOB) ("the Company" or "GEE Group"), a provider of professional staffing services and human resource solutions, today announced results for the second quarter ended March 31, 2020.

2020 Fiscal Second Quarter Highlights

Revenue for the fiscal 2020 second quarter was approximately $34.7 million, down by approximately 4%, a decrease from the $36.2 million recorded in the second quarter of fiscal 2019. Contract staffing services contributed approximately $30.3 million or approximately 87% of revenue and direct placement services contributed approximately $4.4 million or approximately 13% of revenue. This compares to contract staffing services of approximately $31.8 million or approximately 88% of revenue and direct hire placement services of approximately $4.4 million or approximately 12% of revenue respectively for the same quarter of fiscal 2019. The decrease in contract staffing services revenue of approximately $1.5 million, or approximately 5% , for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to the "Novel Coronavirus" outbreak (COVID-19), a pandemic that resulted in a slowing of the hiring of contingent labor and resulting in state and local government mandates in March that caused the Company's clients to close their offices and facilities, requiring certain employees to "work from home", others to go on "furlough" or be "laid-off" and to "suspend" the use of GEE Group's contract workers on assignment. Direct hire placement revenue for the three months ended March 31, 2020 was approximately $4.4 million which was an increase of approximately $66,000 compared to the three months ended March 31, 2019. The increase in direct hire placement revenue was mostly attributable to strong demand in the earlier months of the fiscal 2020 second quarter with weakening demand in the latter part of March due primarily of the impact of the coronavirus.

Revenue from the combined professional contract staffing and professional direct hire placement services, which is comprised of staffing and solutions in the information technology, engineering, healthcare, legal, and finance and accounting specialties, was approximately $30.2 million, and represents approximately 87% of total revenue for the 2020 fiscal second quarter.

Overall gross margin for the fiscal second quarter ended March 31, 2020 (including direct placement services) was approximately 34.4% compared to approximately 32.4% for the fiscal second quarter ended March 31, 2019. The change in the overall gross margin was due to improvement in professional and industrial contract staffing services gross margin and, to a lesser extent, greater direct hire placement revenue (which is recorded at 100% gross margin) in the fiscal 2020 second quarter. Professional contract staffing services gross margin (excluding direct placement services) for the 2020 fiscal second quarter was approximately 26.6 % compared to approximately 24.9% for the 2019 fiscal second quarter. The change in professional contract staffing services gross margin was due to various factors including increased revenue from the Company's higher margin information technology business as compared to the prior fiscal second quarter. Industrial contract staffing services gross margin for the 2020 fiscal second quarter was approximately 14.1% compared to approximately 13.6% for the 2019 fiscal second quarter. The increase in industrial contract staffing services gross margin was due to an increase in the estimated amounts of return premiums the Company was eligible to receive under the Ohio Bureau of Workers' Compensation retrospectively-rated insurance program.

Selling, general and administrative expenses (SG&A) increased by approximately $1million and was approximately 36.9% as a percentage of revenue for the 2020 fiscal second quarter, compared to approximately 30.5% for the 2019 fiscal second quarter. The increase in SG&A expenses is primarily attributable to increases made in the Company's allowance for doubtful accounts, including an increase in GEE Group's allowance for fall-offs.

GAAP loss from operations was approximately $2.4 million for the 2020 fiscal second quarter, compared to GAAP loss from operations of approximately $821,000 for the comparable 2019 fiscal second quarter.

GAAP net loss for the 2020 fiscal second quarter was approximately $5.4 million, compared to GAAP net loss of approximately $3.9 million for the comparable 2019 fiscal second quarter.

Adjusted earnings before interest, taxes, depreciation, amortization, noncash stock and stock option expenses, acquisition, integration and restructuring expenses (adjusted EBITDA, a non-GAAP financial measure) for the 2020 fiscal second quarter was approximately $783,000 vs. approximately $1.90 million for the comparable prior fiscal year second quarter (see non-GAAP adjusted EBITDA reconciliation to GAAP net income (net loss) attached to this press release).

Select GAAP financial information as of March 31, 2020: GAAP net working capital of approximately $9.5 million; GAAP current ratio of approximately 1.8 to 1.0.

Revolving Credit Facility and Term Loan: GEE Group amended its Revolving Credit, Term Loan and Security Agreement April 28, 2020 ("Amendment 7") and May 5, 2020 ("Amendment 8"). The Company believes the loan modifications are beneficial, provide more financial flexibility, improve cash flow and will better meet its needs as it navigates through the COVID-19 pandemic and executes its growth strategy. The amendments provide for a significantly lower "cash-pay" interest rate, deferred "PIK" interest, deferred principal payments until June 2021 and a two-year extension of the maturity date to June 30, 2023. The amendments also provide for greater flexibility on loan covenants and other changes that GEE Group views as favorable. Additionally, Amendment 8 provided the authority for the Company to apply for and secure financial relief under the "CARES Act", in particular, loans pursuant to the "Payroll Protection Plan" ("PPP"). In the early part of May, 2020, GEE Group received funds in the aggregate of approximately $19.8 million in the form of unsecured PPP loans. See previously filed Forms 8K regarding the loan amendments and Form 10Q for the period ended March 31, 2020 filed with the SEC for a more complete description and a complete copy of the amendments.

COVID-19 Update and Impact on Business Operations: As discussed in the "revenue section", the Company experienced an initial decline in business from the impact of the coronavirus from customer layoffs of permanent and temporary workers, remote working, quarantines, shut-downs and hiring freezes commencing in March, with an acceleration of the negative impact beginning in the middle of the month through the end of the fiscal 2020 second quarter. GEE Group's direct hire placement (F&A), industrial staffing, and office support and accounting-related temporary staffing services experienced declines ranging from 30%, and in some cases as high as 50%, toward the latter part of March. IT direct hire placement and IT staffing services were not materially impacted during that period and some IT business units were unaffected. The aforementioned trends continued into April and through much of May. However, it is anticipated that as government mandated lock-downs are lifted, client companies will begin to re-open their offices, start-up their manufacturing facilities and re-connect with supply-chains, the Company's job orders will gradually increase and billable contract headcount and, to a lesser extent, direct hire placement will gradually increase. The Company has taken appropriate measures to adjust its cost structure and has initiated an expense reduction program to account for the reduction in revenue including lowering personnel costs through pay-cuts, furloughs, lay-offs and hiring freezes. Also, other expenses such as interest expenses, rent, job boards and nonessential costs have been reduced, deferred or eliminated. Subsequent to the implementation of the reductions in personnel and reductions in wages, GEE Group secured funds from the CARES Act Payroll Protection Plan ("PPP") as described above. This allowed the Company to restore compensation levels and gradually bring back furloughed employees and selectively add new talent. Thus, GEE Group is well positioned to serve its existing and new customers as the economy stabilizes and the anticipated demand for human resources gradually increases in the U.S. There is no assurance that the expected improvement in the Company's business will occur, that a further outbreak of the coronavirus or another pandemic will not further derail an economic recovery and that a further decline in the demand for employment including the need for the Company's temporary staffing and direct hire services will not happen. These unanticipated but possible series of events would cause a "material adverse effect" to GEE's operations and on its financial results. The Company expects to take immediate and preventative actions to mitigate the impact of the aforementioned negative circumstances if they arise.

The aforementioned 2020 Fiscal Second Quarter Highlights and Financial Information should be read in conjunction with all of the financial and other information included in GEE Group's Quarterly Reports filed with the SEC on Form 10Q for the respective periods, Current Reports on Forms 8K & 8K/A and Information Statements on Schedules 14A & 14C filed with the SEC, and Annual Reports on Form 10K filed with the SEC for the fiscal years ended in 2017, 2018, and 2019. Also, the discussion of financial results in this press release and disclosures regarding the use of non-GAAP financial measures and related schedules attached hereto which reconcile non-GAAP financial measures to the financial information prescribed by GAAP are important to readers to help gain a more comprehensive understanding of the Company's financial results. The non-GAAP financial measures and metrics of financial results or financial performance presented herein are not a substitute for the financial measures provided by GAAP and should not be considered as alternatives, replacements or superior to financial measures presented in accordance with GAAP. Financial information provided in this press release may consist of estimates, projections and certain assumptions that are considered forward looking statements and that are predictive in nature and depend on future events. The estimates and assumptions and related projected financial results may not be realized nor are they guarantees of future performance.

GEE Group uses the above-mentioned non-GAAP financial measures internally to evaluate its operating performance and for planning purposes and believes that these are useful financial measures also used by investors .These non-GAAP financial measures are not a substitute for nor superior to financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP as reflected in the Form 10Q filed with the SEC for the respective periods should be read to obtain a comprehensive and thorough understanding of the Company's financial results. The reconciliation of non-GAAP adjusted EBITDA to GAAP net income (net loss) is provided in a schedule that is a part of this press release.

Management Comments

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, "Our hard -working and dedicated personnel have adapted well to a "remote working" environment and are well-positioned to fill job orders related to the needs of our clients despite the significant challenges created by the coronavirus. We are encouraged about the "new world order" and the changes in the way people work, which we believe will result in the increased use of contingent labor and a further acceptance of remote-working in the ‘gig economy'. The disruption to businesses and harsh economic effects attributable to COVID-19 have been without precedent. However, the Company has adapted well to serve clients remotely, made critical investments in IT infrastructure and will continue to capitalize on the business opportunities in the high-tech and accounting/finance verticals as governmental "lock-downs" are lifted. The Company continues to focus on internal growth and increasing market share through targeted sales and marketing efforts directed to existing and new customers. Additionally, GEE Group will capitalize on opportunities to selectively increase revenue-producing headcount in key markets with an emphasis on the specialized needs of customers in light of the coronavirus, in particular the higher demand verticals, including information technology, finance and accounting, engineering and healthcare."

Mr. Dewan added, "GEE's enhanced and streamlined service delivery capability, both remotely and on-premises, in providing professional staffing services and human resource solutions, coupled with its strategic geographic coverage, will help the Company achieve sustained organic growth in revenue and profitability while delivering exceptional customer service and rewarding careers for our employees and associates."

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company discloses certain financial information including non-GAAP adjusted EBITDA because management uses these supplemental non-GAAP financial measures to help evaluate performance period over period, to analyze the underlying trends in its business, to establish operational goals, to provide additional measures of operating performance, including using the information for internal planning relating to the Company's ability to meet debt service, make capital expenditures and provide working capital needs. In addition, the Company believes investors already use these non-GAAP measures to monitor the Company's performance. Non-GAAP adjusted EBITDA is defined by the Company as net income or net loss before interest, taxes, depreciation and amortization (EBITDA) plus non-cash stock option and stock-based compensation expenses, the change in contingent consideration and acquisition, integration and restructuring costs. Non-GAAP adjusted EBITDA is not a term defined by GAAP and, as a result, the Company's measure of non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above, however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss and income or loss from operations as reported for GAAP on the Consolidated Statements of Income, cash and cash flows as reported for GAAP on the Consolidated Statement of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company's financial statements prepared in accordance with GAAP included in GEE Group's Form 10Q and Form 10K filed for the respective fiscal periods with the SEC. Reconciliation of GAAP net income or GAAP net loss to non-GAAP adjusted EBITDA is attached hereto.

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including results of business operations, certain projections, future financial condition, pro forma financial information, and business trends and prospects) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995 and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. The international pandemic, the "Novel Coronavirus" ("COVID"-19), has been detrimental to and continues to negatively impact and disrupt the Company's business operations. The health outbreak has caused a significant negative effect on the global economy, employment in general including the lack of demand for the Company's services which is exacerbated by government and client directed "quarantines", "remote working", "shut-downs" and "social distancing". There is no assurance that conditions will not worsen and further negatively impact GEE Group. Certain other factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism, industrial accidents, or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants including the lack of liquidity to support business operations and the inability to refinance debt, failure to obtain necessary financing or the inability to access the capital markets and/or obtain alternative sources of capital; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; (xiii) the adverse impact of geopolitical events, government mandates, natural disasters or health crises, force majeure occurrences , global pandemics such as the deadly "coronavirus" (COVID-19) or other harmful viral or non-viral rapidly spreading diseases and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise, or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Preferred series B stock; authorized - 5,950 shares; issued and outstanding - 5,566 and 5,566 at March 31, 2020 and September 30, 2019, respectively; liquidation value of the preferred series B stock is approximately $27,050 and $27,050 at March 31, 2020 and September 30, 2019, respectively

27,551

27,551

Preferred series C stock; authorized - 3,000 shares; issued and outstanding - 144 and 60 at March 31, 2020 and September 30, 2019, respectively; liquidation value of the preferred series C stock is approximately $144 and $60 at March 31, 2020 and September 30, 2019, respectively

]]>GEE Group Adds Three Members to its Board of Directorshttps://ir.geegroup.com/news/detail/149/gee-group-adds-three-members-to-its-board-of-directors
Fri, 03 Apr 2020 16:25:00 -0400https://ir.geegroup.com/news/detail/149/gee-group-adds-three-members-to-its-board-of-directorsJACKSONVILLE, FL / ACCESSWIRE / April 3, 2020 / GEE Group Inc. (NYSE American:JOB) ("the Company" or "GEE Group"), a provider of professional staffing services and solutions, today announced the addition of three new directors to the Company's Board and the resignation of a member due to other commitments. The newly elected directors include Carl Camden, Matt Gormly, and Thomas Vetrano. Distinguished economist, Dr. Arthur Laffer, who has been a valued member of the GEE Group Board since 2015, resigned concurrent with the election of the new directors due to time constraints related to his increased private and public sector economic advisory workload.

Experienced and Results-Oriented Business Leaders

The new members of the GEE Group Board of Directors are proven business leaders with significant expertise in their respective fields. Carl Camden, Matt Gormly, and Thomas Vetrano bring keen operational and financial knowledge to the Company.

Carl Camden, the former long-term president and chief executive officer of global staffing giant Kelly Services® ("Kelly"), is a recognized leader in the use of contingent on-demand labor, talent management and how companies can adapt and succeed in the "gig economy". His varied professional and educational background which includes several college degrees including a PhD, gives him a unique perspective on the changing world of work. Carl is the founder and current president of IPSE- the Association of Independent Professionals and the Self-Employed. In addition to leading Kelly, he has been a senior executive for companies in various industries and served as a tenured university professor. Carl serves on the Board of Trustees of The Conference Board, as well as Co-Chair of the Policy & Impact Committee for the Committee for Economic Development. He also serves on the Board of Directors of TopBuild, a leading installer and distributor of insulation products in the U.S. construction industry.Previously he has served on the board of directors for a regional branch of the Federal Reserve Bank of Chicago, the Labor Advisory Council for the Federal Reserve Bank, the Advisory Committee on Employee Welfare and Pension Benefits (ERISA Advisory Council) and the Board of Visitors of Duke University Fuqua School of Business. Also, Carl was a member of the Board of Trustees for the University of Detroit Mercy, the Detroit Medical Center Board and the Detroit Chamber Board. He has served on the American Staffing Association's Board of Directors, and received awards from international workforce agencies for his significant contributions to improving the workforce development system.Carl has been featured in Business Week, The New York Times, Bloomberg, CNBC and numerous other media on topics ranging from labor force dynamics to health care reform.

Matt Gormly is a Founder and Managing Partner of ReynoldsGormly & Co, LLC where he is responsible for origination and execution of capital markets opportunities and firm general management. Prior to ReynoldsGormly, Matt Gormly played a leadership role in the growth and evolution of Wicks Capital Partners as a Managing Partner for 17 years before departing the firm in 2016. At Wicks he focused his energy on originating, acquiring, managing, growing and divesting its portfolio of control buyout investments. Matt has extensive experience in all aspects of the investment process including developing investment theses, origination, acquisitions, strategic planning and divestitures. Additionally, Matt was responsible for all financing activities, including acquisitions, add-ons, leveraged recaps and refinancing's of portfolio companies. Since Matt joined the firm, Wicks successfully raised and invested over $1 billion in private equity capital and related debt financings primarily in the information, education and media industries. Previously, Matt was a Managing Director at BCI Advisors, a middle market growth equity and control buyout investment firm where he was responsible for originating new investments, arranging financing for transactions and managing those investments through the sale processes. Matt has been on the board of directors of over 25 companies spanning a 30-year period and has been responsible for over $1.5 Billion in financings for acquisitions, leveraged recaps, and re-financings over the course of his career. Matt holds a B.A. in economics and an MBA in finance.

Thomas Vetrano has over 35 years of international business experience assisting various corporations, private equity firms and financial institutions in identifying and resolving complex business and operational issues associated with acquisitions and divestitures in addition to regulatory compliance and litigation matters. An internationally recognized expert in merger and acquisition (M&A) due diligence, he has directed a multitude of businesses in the due diligence process in support of over 500 global transactions across a wide range of industries and sectors. Tom has been a chairman or speaker at numerous business conferences and seminars and has authored/co-authored publications on due diligence, environmental auditing, cost recovery litigation support, and related subjects. Mr. Vetrano was responsible for all REH global business operations, including financial performance; strategic planning; finance and accounting; enterprise risk management; human resources; information technology and marketing and communications. He participated in a management-led buyout of ENVIRON from its public company owner in 1999. During his executive leadership from 2004 to 2014 ENVIRON, a leading employee-owned environmental and health consultancy, grew from less than $100 million to over $300 million in revenue, expanding from 300 employees in the US and UK to over 1,600 employees in 25 countries. Following his direction of the sale of ENVIRON to Ramboll in 2014, Mr. Vetrano was responsible for the overall post-merger business integration and was appointed to the Ramboll senior global leadership team. Mr. Vetrano served as a member of the REH Board of Directors, as well as numerous Ramboll international statutory and governance Boards, from 2014 through 2019. He also served on the ENVIRON Board of Directors from 2000 through 2014 in both elected and appointed positions. During his board tenure, Tom chaired or served on the ethics, equity, executive compensation, and valuation committees. Mr. Vetrano has also served on the boards of several private, educational, and charitable organizations. Tom holds a bachelors and masters degree.

Management Comments

In reference to the new director appointments, Derek Dewan, Chairman and Chief Executive Officer of GEE Group, said, "The new board members bring a wealth of knowledge to our Company. Their business acumen and financial expertise, coupled with their experience in managing and advising large-scale organizations, will be most valuable to GEE." Dewan further commented, "In these challenging times, the Company is most fortunate to be able to tap into the collective knowledge of our stellar Board of Directors to help the executive team navigate through near-term challenges and capitalize on the emerging opportunities arising from a monumental change in the work environment, which we believe will be centered around ‘on-demand' labor and the ‘free agent' workforce."

About GEE Group Inc.

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

]]>GEE Group Announces Results for the Fiscal 2020 First Quarterhttps://ir.geegroup.com/news/detail/148/gee-group-announces-results-for-the-fiscal-2020-first-quarter
Fri, 14 Feb 2020 06:30:00 -0500https://ir.geegroup.com/news/detail/148/gee-group-announces-results-for-the-fiscal-2020-first-quarterJACKSONVILLE, FL / ACCESSWIRE / February 14, 2020 / GEE Group Inc. (NYSE American:JOB) ("the Company" or "GEE Group"), a provider of professional staffing services and solutions, today announced results for the first quarter ended December 31, 2019.

2020 First Quarter Highlights

Revenue for the fiscal 2020 first quarter was approximately $37.6 million compared to the first quarter of fiscal 2019 amount of approximately $38.5 million. Contract staffing services contributed approximately $33.1 million or approximately 88.1% of revenue and direct placement services contributed approximately $4.5 million or approximately 11.9% of revenue. This compares to contract staffing services of approximately $34.0 million or approximately 88.2% of revenue and direct placement services of approximately $4.5 million or approximately 11.8% of revenue respectively for the same quarter of fiscal 2019. Revenue from the combined professional contract and professional direct placement services which is comprised of staffing and solutions in the information technology, engineering, healthcare and finance and accounting specialties was approximately $31.9 million and represents approximately 84.9% of total revenue for the 2020 fiscal first quarter compared to approximately $32.9 million or approximately 85.4% of total revenue for the 2019 fiscal first quarter. The slight change in contract staffing services and direct placement revenue in the first quarter of fiscal 2020 vs. the first quarter of fiscal 2019 was attributable to various factors including fewer actual billing days due to inclement weather and winter holidays falling mid-week during the quarter.

Overall gross margin for the fiscal first quarter ended December 31, 2019 (including direct placement services) improved and was approximately 33.5% compared to approximately 33.0% for the fiscal first quarter ended December 31, 2018. The change in the overall gross margin was primarily due to an increase in both the professional and industrial contract services gross margin. Professional contract staffing services gross margin (excluding direct placement services) improved for the 2020 fiscal first quarter and was approximately 26.4% compared to approximately 26.1% for the 2019 fiscal first quarter. The change in professional contract staffing services gross margin was primarily due to a revenue mix shift to higher-margin IT business and a lower percentage of revenue contributed from Vendor Management Systems ("VMS"), Managed Service Providers ("MSP"), Master Service Agreements ("MSA") and other volume corporate accounts. Industrial contract services gross margin for the 2020 fiscal first quarter was approximately 15.6% compared to approximately 13.9% for the 2019 fiscal first quarter. The change in industrial contract services gross margin was primarily due in part to a shift to higher-margin business and lower workers' compensation costs for the three months ended December 31, 2019.

Selling, general and administrative expenses (SG&A) as a percentage of revenue for the 2020 fiscal first quarter was approximately 29% compared to approximately 25% of revenue for the 2019 fiscal first quarter. SG&A was approximately $ 10.9 million for the 2020 fiscal first quarter as compared to approximately $9.8 million for the 2019 fiscal first quarter. The change in SG&A of approximately $1.1million was primarily attributable to the benefit recognized in the prior year fiscal first quarter for return premiums the Company was eligible to receive from the Ohio Bureau of Workers' Compensation retrospectively-rated insurance program which lowered SG&A in that quarter; and, increases in sales-related and incentive compensation plus additional professional fees incurred for the quarter ended December 31, 2019. Also, SG&A included non-cash stock-based compensation expenses of approximately $597,000 for the 2020 fiscal first quarter and approximately $581,000 for the 2019 fiscal first quarter.

GAAP loss from operations for the 2020 fiscal first quarter was approximately $173,000 compared to GAAP income from operations of approximately $19,000 for the comparable 2019 fiscal first quarter.

GAAP net loss for the 2020 fiscal first quarter was approximately $3.6 million compared to GAAP net loss of approximately $3.5 million for the comparable 2019 fiscal first quarter.

Adjusted earnings before interest, taxes, depreciation, amortization, noncash stock and stock option expenses and acquisition, merger, integration and restructuring expenses (adjusted EBITDA, a non-GAAP financial measure) for the 2020 fiscal first quarter ended December 31, 2019 was approximately $2.3 million vs. approximately $3.3 million for the comparable prior year fiscal first quarter (see non-GAAP adjusted EBITDA reconciliations to GAAP net income (net loss) attached to this press release).

GAAP net working capital was approximately $10.3 million as of December 31, 2019.

The aforementioned 2020 Fiscal First Quarter Highlights should be read in conjunction with all of the financial and other information included in GEE Group's Quarterly Reports filed with the SEC on Form 10Q for the respective periods, Current Reports on Forms 8K & 8K/A and Information Statements on Schedules 14A & 14C filed with the SEC, and Annual Reports on Form 10K filed with the SEC for the fiscal years ended in 2018 and 2019; and the discussion of financial results in this press release and the use of non-GAAP financial measures and the related schedules attached hereto which reconcile non-GAAP financial measures and financial information to that prescribed by GAAP. These non-GAAP financial measures and metrics of financial results or financial performance are not a substitute for the financial measures provided by GAAP and should not be considered as alternatives, substitutes or superior to financial measures presented in accordance with GAAP. Financial information provided in this press release may consist of estimates, projections and certain assumptions that are considered forward-looking statements and that are predictive in nature, depend on future events and the projected financial results may not be realized nor are they guarantees of future performance.

GEE Group uses the above-mentioned non-GAAP financial measures internally to evaluate its operating performance and for planning purposes and believes that these are useful financial measures also used by investors. These non-GAAP financial measures are not a substitute for nor superior to financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP as reflected in the Form 10Q filed with the SEC for the respective periods should be read to obtain a comprehensive and thorough understanding of the Company's financial results. The reconciliations of non-GAAP adjusted EBITDA to GAAP net income (net loss) are provided in schedules that are a part of this press release.

Management Comments

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, "GEE's results for the first quarter of fiscal 2020 were solid. The Company's operational improvement plan implemented during the past fiscal year continues to have a positive impact on the Company's financial performance and helped GEE achieve adjusted EBITDA of approximately $2.3 million for the quarter. We have put in place an aggressive top and bottom line budget which we expect will have a very positive impact on revenue and adjusted EBITDA. Our outstanding employees have made great strides to improve their productivity and provide outstanding customer service. GEE continues to selectively add recruitment and sales talent to increase organic revenue growth. The Company's priorities include taking actions that will improve its balance sheet and financial position, enhance profitability and broaden its menu of services and delivery network."

Mr. Dewan added, "We anticipate that the tight labor market we are experiencing now, with record low unemployment, will continue for the rest of this year. Demand for highly skilled professional workers in IT, accounting, finance, engineering, and healthcare remains strong, and GEE Group is well equipped to recruit and deploy the best talent to fulfill our customers' needs. Greater usage of flexible, on-demand labor to satisfy the human resource needs in corporate America provides very favorable conditions for our business and the staffing industry as a whole."

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company discloses certain financial information including non-GAAP adjusted EBITDA because management uses these supplemental non-GAAP financial measures to help evaluate performance period over period, to analyze the underlying trends in its business, to establish operational goals, to provide additional measures of operating performance, including using the information for internal planning relating to the Company's ability to meet debt service, make capital expenditures and provide working capital needs. In addition, the Company believes investors already use these non-GAAP measures to monitor the Company's performance. Non-GAAP adjusted EBITDA is defined by the Company as net income or net loss before interest, taxes, depreciation and amortization (EBITDA) plus non-cash stock option and stock-based compensation expenses and acquisition, integration and restructuring costs, change in contingent consideration and loss on disposal of assets. Non-GAAP adjusted EBITDA is not a term defined by GAAP and, as a result, the Company's measure of non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above, however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss as reported for GAAP on the Consolidated Statements of Income, cash and cash flows as reported for GAAP on the Consolidated Statement of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company's financial statements prepared in accordance with GAAP included in GEE Group's Form 10Q and Form 10K filed for the respective fiscal periods with the SEC. Reconciliations of GAAP net income or GAAP net loss to non-GAAP adjusted EBITDA are attached hereto.

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Preferred series B stock; authorized - 5,950 shares; issued and outstanding - 5,566 and 5,566 at December 31, 2019 and September 30, 2019, respectively; liquidation value of the preferred series B stock is approximately $27,050 and $27,050 at December 31, 2019 and September 30, 2019, respectively

27,551

27,551

Preferred series C stock; authorized - 3,000 shares; issued and outstanding - 102 and 60 at December 31, 2019 and September 30, 2019, respectively; liquidation value of the preferred series C stock is approximately $102 and $60 at December 31, 2019 and September 30, 2019, respectively

]]>GEE Group's SNI Companies Wins ClearlyRated's 2020 Best of Staffing for Client and Talent Satisfactionhttps://ir.geegroup.com/news/detail/147/gee-groups-sni-companies-wins-clearlyrateds-2020-best-of-staffing-for-client-and-talent-satisfaction
Thu, 06 Feb 2020 13:27:00 -0500https://ir.geegroup.com/news/detail/147/gee-groups-sni-companies-wins-clearlyrateds-2020-best-of-staffing-for-client-and-talent-satisfactionJACKSONVILLE, FL / ACCESSWIRE / February 6, 2020 / GEE Group Inc. (NYSE American:JOB) the ("Company" or "GEE Group"), a provider of professional staffing services and solutions, announced today that the four main divisions of its SNI Companies subsidiary won ClearlyRated's 2020 Best of Staffing® Awards. Accounting Now, Staffing Now, SNI Financial and SNI Technology are proud to have won Best of Staffing Client and Talent Awards for providing superior service to their clients and candidates. Also, the Accounting Now, Staffing Now, and SNI Financial divisions received the prestigious "Diamond Award" for winning Best of Staffing® for 5+ consecutive years. Presented in partnership with presenting sponsor, CareerBuilder, and gold sponsors Indeed and Glassdoor, ClearlyRated's Best of Staffing® Awardwinners have proven to be industry leaders in service quality based entirely on ratings provided by their clients and candidates. On average, clients of winning agencies are 3.3 times more likely to be completely satisfied, and candidates who have been placed by winning agencies are 1.7 times more likely to be completely satisfied with the services provided compared to those working with non-winning agencies.

"Now more than ever, it is important for staffing firms to deliver consistently remarkable experiences to the clients and talent they work with," said ClearlyRated's CEO Eric Gregg. "This year's Best of Staffing winners have shown their commitment to exceptional service, committing to not only measuring satisfaction, but taking action on the feedback. I couldn't be prouder to showcase these industry leaders alongside feedback from their actual clients and candidates on ClearlyRated.com and applaud them for their commitment to making improvements at their respective firms!"

Derek Dewan, Chairman and CEO of GEE Group, added, "Our dedicated and talented hard-working professionals continue their highly successful track record of providing outstanding, high-quality staffing services and solutions to our customers. We are honored to receive this prestigious award for multiple SNI divisions over the last several years."

About SNI Companies

SNI Companies, a subsidiary of GEE Group Inc., specializes in the placement of administrative, finance, accounting, banking, technology, and legal professionals on a temporary and full-time basis. They deliver staffing solutions across a wide range of disciplines and industries and their divisions include Accounting Now, Staffing Now, SNI Financial, SNI Technology, SNI Banking, SNI Certes, SNI Energy, and SNI Legal. SNI Companies has a commitment to professionalism that is unparalleled.

About GEE Group Inc.

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now, Staffing Now, SNI Financial, SNI Technology, SNI Banking, SNI Certes, SNI Energy, and SNI Legal.

About ClearlyRated

Rooted in satisfaction research for professional service firms, ClearlyRated utilizes a Net Promoter Score survey program to help professional service firms measure their service experience, build online reputation, and differentiate on service quality. Learn more at https://www.clearlyrated.com/solutions/.

About Best of Staffing

ClearlyRated's Best of Staffing® Award is the only award in the U.S. and Canada that recognizes staffing agencies that have proven superior service quality based entirely on ratings provided by their clients and job candidates. Award winners are showcased by city and area of expertise on ClearlyRated.com - an online business directory that helps buyers of professional services find service leaders and vet prospective firms - based exclusively on validated client and talent ratings and testimonials.

Revenue for the fiscal 2019 fourth quarter was approximately $38.9 million. Contract staffing services contributed approximately $34.1 million or approximately 88% of revenue and direct placement services contributed approximately $4.8 million or approximately 12% of revenue. This compares to contract staffing services of approximately $34.4 million or approximately 86% of revenue and direct placement services of approximately $5.6 million or approximately 14% of revenue respectively for the same quarter of fiscal 2018.

Revenue for the fiscal year ended September 30, 2019 was approximately $151.7 million, lower by approximately 8% over the prior fiscal year ended September 30, 2018. Contract staffing services contributed approximately $133.1 million or approximately 88% of revenue and direct placement services contributed approximately $18.5 million or approximately 12% of revenue. This compares to contract staffing services of approximately $142.2 million or approximately 86% of revenue and direct placement services of approximately $23.1 million or approximately 14% of revenue respectively for the 2018 fiscal year. The decrease in contract staffing services and direct placement services revenue for fiscal 2019, compared to fiscal 2018, was primarily due to management's design and implementation of a performance improvement plan which resulted in the reduction in the number of marginally performing and underperforming full time employees in sales, recruitment and account management coupled with certain office consolidations.

Revenue from combined professional contract and professional direct placement services, which is comprised of staffing and solutions in the information technology, engineering, healthcare and finance & accounting specialties, was approximately $33.3 million and represents approximately 86% of total revenue for the 2019 fiscal fourth quarter and approximately $130 million and approximately 86% of total revenue respectively for the fiscal year ended September 30, 2019. This compares to approximately $34.4 million or approximately 86% of total revenue for the fourth quarter of fiscal 2018 and approximately $143.6 million and approximately 87% of total revenue respectively for the fiscal year ended September 30, 2018. A component of the Company's strategic plan is to focus on the higher margin professional staffing and solutions services sectors through organic growth and acquisitions.

Overall combined gross margin for the fiscal fourth quarter ended September 30, 2019 (including direct placement services which is recorded at 100% gross margin) was approximately 34.2% compared to approximately 37.1% for the fiscal fourth quarter ended September 30, 2018. The combined overall contract staffing gross margin (excluding direct placement services) was approximately 25% for the fiscal year fourth quarter of 2019 vs. approximately 26.9% for the comparable prior year quarter. Overall combined professional services gross margin for the 2019 fiscal year fourth quarter (including direct placement services) was approximately 37.3% vs. approximately 38.4% for the 2018 fiscal year fourth quarter. Professional contract staffing services gross margin (excluding direct placement services) for the fourth quarter ended September 30, 2019 was approximately 26.8% vs. approximately 26.5% for the comparable prior year quarter. Commercial (industrial) staffing services gross margin was approximately 15.9% for the 2019 fiscal year fourth quarter vs. approximately 14.2% for the 2018 fiscal year fourth quarter (unadjusted for the full effect of workers compensation rebates received in each of the fiscal fourth quarters; if the rebates were taken into account in the 2019 and 2018 fourth quarters, gross margin would be several hundred basis points higher in each of the fiscal year fourth quarters. See comparative full fiscal year results below). The changes in GEE's 2019 fiscal year fourth quarter vs. the 2018 fiscal year fourth quarter in overall gross margin, overall contract staffing gross margin, professional contract staffing gross margin and commercial (industrial) staffing services gross margin are primarily attributable to more direct placement revenue as a percentage of total revenue in the fiscal 2018 fourth quarter compared to the fourth quarter of fiscal 2019, revenue mix and the elimination of lower margin business, plus the benefit of an enhanced workers compensation program including rebates in the commercial (industrial) staffing services division.

The Company's overall combined gross margin for the fiscal year ended September 30, 2019 (including direct placement services) was approximately 34.3% compared to approximately 35.7% for the fiscal year ended September 30, 2018. The combined overall contract staffing gross margin (excluding direct placement services) was unchanged and approximately 25.2% for the 2019 fiscal year end vs. approximately 25.2% for the 2018 fiscal year end. Professional contract staffing services gross margin (excluding direct placement services) for the 2019 fiscal year end was approximately 26% compared to approximately 26.5% for the 2018 fiscal year end. Including workers' compensation rebates earned in each of the fiscal years, commercial staffing services (light industrial) gross margin for the 2019 fiscal year end was approximately 20.8% compared to approximately 17.9% for the 2018 fiscal year end. The changes in the fiscal year ended September 30, 2019 vs. the comparable 2018 prior fiscal year in overall gross margin, overall contract staffing gross margin, professional contract staffing gross margin and commercial staffing services gross margin, are primarily attributable to more direct hire revenue as a percentage of revenue in the 2018 fiscal year compared to the 2019 fiscal year, revenue mix including MSP/VMS and the elimination of lower margin business, plus the benefit of a workers compensation program and rebates in the commercial (industrial) services division.

Selling, general and administrative expenses (SG&A) were approximately $10.9 million and approximately 28% as a percentage of revenue for the 2019 fiscal fourth quarter compared to approximately $11.6 million and approximately 29% of revenue for the 2018 fiscal fourth quarter. The decrease in SG&A expenses and SG&A as a percentage of revenue for the 2019 fiscal fourth quarter vs. the comparable prior year quarter is primarily due to the effect of the Company's performance improvement plan which reduced personnel costs and related ancillary expenses.

SG&A was approximately $42.5 million for the 2019 fiscal year compared to approximately $47.4 million for the 2018 fiscal year. Selling, general and administrative expenses (SG&A) decreased as a percentage of revenue for the 2019 fiscal year and were approximately 28% compared to approximately 29% of revenue for the 2018 fiscal year. The approximately $4.9 million and 100 basis point decrease in SG&A primarily resulted from the implementation of GEE's performance improvement plan by improving productivity and lowering certain personnel costs, office expenses and related overhead expenses.

GAAP loss from operations for the 2019 fiscal fourth quarter was approximately $386,000 compared to GAAP income from operations of approximately $378,000 for the comparable fiscal 2018 prior year quarter. GAAP loss from operations for the fiscal year ended September 30, 2019 was approximately $5.0 million vs. GAAP income from operations of approximately $2.5 million for the fiscal year ended September 30, 2018.

GAAP net loss for the fiscal fourth quarter ended September 30, 2019 was approximately $3.6 million compared to a GAAP net loss of approximately $1.6 million for the fiscal fourth quarter ended September 30, 2018. The GAAP net loss for the fiscal fourth quarter of 2018 included an income tax benefit of approximately $1.1 million as compared to an income tax benefit of approximately $30,000 for the fiscal fourth quarter of 2019. GAAP net loss for the fiscal year ended September 30, 2019 was approximately $17.8 million vs. a GAAP net loss of approximately $7.6 million for the fiscal year ended September 30, 2018. The GAAP net loss for the fiscal year ended September 30, 2019 included approximately $4.3 million in a noncash goodwill impairment charge. The GAAP net loss for the fiscal year ended September 30, 2018 included an income tax benefit of approximately $859,000 as compared to an income tax expense of approximately $370,000 included in the GAAP net loss for the fiscal year ended September 30, 2019.

Adjusted EBITDA (adjusted EBITDA, a non-GAAP financial measure) computed EBITDA as adjusted for noncash stock compensation and stock option expense, acquisition, integration & restructuring expenses and changes in acquisition deposit for working capital guarantee for the fiscal fourth quarter ended September 30, 2019 was approximately $2.9 million vs. adjusted EBITDA of approximately $3.1 million for the comparable 2018 prior year fiscal fourth quarter. Reconciliations of non-GAAP adjusted EBITDA for the fiscal fourth quarters of 2019 and 2018 to GAAP net income (net loss) for those periods are attached to this press release.

Adjusted EBITDA (adjusted EBITDA, a non-GAAP financial measure) computed EBITDA as adjusted for noncash stock compensation and stock option expense, acquisition, integration & restructuring expenses, changes in acquisition deposit for working capital guarantee and noncash goodwill impairment charges for the fiscal year ended September 30, 2019 was approximately $11.8 million vs. adjusted EBITDA of approximately $13.2 million for the fiscal year ended September 30, 2018. Reconciliations of non-GAAP adjusted EBITDA for the fiscal years ended September 30, 2019 and September 30, 2018 to GAAP net income (net loss) for those periods are attached to this press release.

Additional relevant financial information: During fiscal 2019, GEE amended its revolving credit facility. The Company believes the loan modifications are beneficial, provide more flexibility, will improve cash flow and will better meet its needs as it executes its growth strategy. The amendment included reduced principal payments, greater flexibility on loan covenants and other terms that the Company views as favorable. See Form 10K for the fiscal year ended September 30, 2019 filed with the SEC for a more complete description and a complete copy of the amendment.

The aforementioned Fourth Quarter and Full Year Highlights should be read in conjunction with all of the financial and other information included in GEE Group's Quarterly Reports on Form 10Q, Current Reports on Forms 8K & 8K/A, Information Statements on Schedules 14A & 14C, and Annual Reports on Form 10K filed with the SEC for the fiscal years 2018 and 2019, the discussion of financial results in this press release, and the use of non-GAAP financial measures and the related schedules attached hereto which reconcile non-GAAP financial information to that prescribed by GAAP. These non-GAAP financial measures and metrics of financial results or financial performance are not a substitute for the measures provided by GAAP as further discussed below in this press release. Financial information provided in this press release may consist of estimates, projected financial information and certain assumptions that are considered forward looking statements and are predictive in nature, depend on future events and the projected financial results may not be realized nor are they guarantees of future performance.

Full Year Financial Results: Discussion

The Company reported consolidated revenue of approximately $151.7 million for the year ended September 30, 2019 as compared to revenue of approximately $165.3 million for the fiscal year ended September 30, 2018. Contract staffing services contributed approximately $133.1 million or approximately 88% of consolidated revenue and direct placement services contributed approximately $18.5 million or approximately 12% of consolidated revenue for the 2019 fiscal year versus approximately $142.2 million or approximately 86% of consolidated revenue and approximately $23.1 million or approximately 14% of consolidated revenue respectively for the 2018 fiscal year. The decrease in contract staffing services and direct placement services revenue for fiscal 2019 as compared to fiscal 2018 was primarily due to management's design and implementation of a performance improvement plan which resulted in the reduction in the number of marginally performing and underperforming full time employees in sales, recruitment and account management coupled with certain office consolidations. Commercial (industrial) staffing services revenue was approximately $21.7 million for the fiscal year ended September 30, 2019 as compared to approximately $21.6 million for the fiscal year ended September 30, 2018.

GEE Group's overall combined gross margin for the fiscal year ended September 30, 2019 (including direct placement services) was approximately 34.3% as compared to approximately 35.7% recorded for the fiscal year ended September 30, 2018. The decrease in overall combined gross margin for the 2019 fiscal year was primarily attributable to a lower direct placement services revenue which is recorded at 100% gross profit. The Company's professional contract staffing services gross profit margin, excluding direct placement services for the fiscal year ended September 30, 2019, was approximately 26% versus approximately 26.5% for fiscal year ended September 30, 2018. The Company's commercial (industrial) staffing services gross margin for the 2019 fiscal year was approximately 20.8% versus approximately 17.9% for the 2018 fiscal year. The change in professional contract staffing services gross margin was primarily due to a revenue mix change including MSP/VMS business which typically carries lower gross margin and lower SG&A with good profitability. GEE's commercial (industrial) staffing services division gross margin including Ohio workers' compensation insurance refunds improved by approximately 280 basis points for the fiscal year ended September 30, 2019 vs. the comparable prior year period. The improved gross margin was primarily attributable to the elimination of less profitable customers, better pricing from new and existing customers, and the increased benefit of lower workers' compensation costs and related rebates in the 2019 fiscal year.

The Company's selling, general and administrative expenses (SG&A) for the year ended September 30, 2019 decreased by approximately $4.9 million to approximately $42.5 million compared to approximately $47.4 million for the prior fiscal year. The decrease was related to the implementation of a performance improvement plan that reduced headcount costs and lowered overall associated expenses.

GEE Group recorded a GAAP loss from operations of approximately $5.0 million for the fiscal year ended September 30, 2019 compared to a GAAP income from operations of approximately $2.5 million for the fiscal year ended September 30, 2018. GAAP net loss for the fiscal year ended in 2019 was approximately $17.8 million compared to GAAP net loss for the fiscal year ended in 2018 of approximately $7.6 million. The GAAP net loss for the fiscal year ended September 30, 2019 included a noncash goodwill impairment charge of approximately $4.3 million, increased interest costs and higher acquisition, integration and merger expenses. GAAP net loss for the 2018 fiscal year included a tax benefit of approximately $859,000 vs. income tax expense of approximately $370,000 included in GAAP net loss for the 2019 fiscal year.

GEE Group's adjusted EBITDA (adjusted EBITDA, a non-GAAP financial measure), computed EBITDA as adjusted for noncash stock compensation and stock option expense, acquisition, integration & restructuring expenses, changes in acquisition deposit for working capital guarantee and noncash goodwill impairment charges was approximately $11.8 million for the fiscal year ended September 30, 2019 compared to adjusted EBITDA of approximately $13.2 million for the fiscal year ended September 30, 2018. Reconciliations of non-GAAP adjusted EBITDA for the fiscal years ended September 30, 2019 and September 30, 2018 to GAAP net income (net loss) for those periods are attached to this press release.

Use of Non-GAAP Financial Measures

The Company discloses and uses the above-mentioned non-GAAP financial measures internally as a supplement to GAAP financial information to evaluate its operating performance, for financial planning purposes, to establish operational goals, for compensation plans, to measure debt service capability, for capital expenditure planning and to determine working capital needs and believes that these are useful financial measures also used by investors. Non-GAAP adjusted EBITDA is defined as GAAP net income or net loss before interest, taxes, depreciation and amortization (EBITDA) adjusted for the non-cash stock compensation and stock option expense, acquisition, integration & restructuring expenses, changes in acquisition deposit for working capital guarantee and noncash goodwill impairment charges. Non-GAAP EBITDA and non-GAAP adjusted EBITDA are not terms defined by GAAP and, as a result, the Company's measure of non-GAAP EBITDA and non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above , however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss as reported for GAAP on the Consolidated Statements of Income, cash and cash flows on the Consolidated Statement of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company's financial statements prepared in accordance with GAAP included in GEE Group's Form 10Q and Form 10K for the respective periods filed with the SEC. These non-GAAP financial measures are not a substitute for or presented in lieu of financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP as reflected in Form 10Q and Form 10-K for the respective periods should be read to obtain a comprehensive and thorough understanding of the Company's financial results. The reconciliations of non-GAAP EBITDA and non-GAAP adjusted EBITDA to GAAP operating income (loss) and/or GAAP net income (net loss) referred to in the highlights or elsewhere in this press release are provided in the schedules that are a part of this press release.

Management Comments

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, "The Company had solid financial performance for the fiscal year ended September 30th, 2019. We continued to streamline and further integrate our operations, increase the overall productivity of our hard-working sales, recruitment and account management personnel, all of whom contributed to a very successful year. GEE Group is aggressively adding human resources in the field to accelerate revenue growth in order to meet the aggressive budget goals established for fiscal 2020. This will help our staff better meet the growing demand for existing customers and expand our client base. We continue to refine and broaden our menu of services and our delivery capability."

Mr. Dewan added, "We will continue to build on the progress made in fiscal 2019 and we expect to obtain some additional operational efficiencies and economies of scale in fiscal 2020.The cost savings expected, coupled with our anticipated revenue gains, will help GEE significantly improve its bottom line in fiscal 2020. The Company's mission is clear. It will focus on organic growth, and cross-selling services within offices and geographically. We continue to be opportunistic with potential strategic acquisitions and mergers, which will be beneficial to the operations and financial position of the Company."

Mr. Dewan concluded, "Demand for our services through the end of 2019, absent the holiday schedule, continues to be robust. We anticipate that the strong employment environment experienced in the last several years will continue as we enter 2020. The widespread use of contingent labor, coupled with continued requirements for full time hires, will continue to benefit the staffing industry and GEE. Macroeconomic conditions are anticipated to be conducive to the continued growth and profitability of our sector and our Company. Our talented field leadership team and local office professional staff continue to deliver outstanding customer service; thus, we are optimistic about GEE Group's continued success as we enter into 2020."

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Balance Sheet

(in thousands)

September 30,

ASSETS

2019

2018

CURRENT ASSETS:

Cash

$

4,055

$

3,213

Accounts receivable, less allowances ($515 and $302, respectively)

20,826

20,755

Prepaid expenses and other current assets

2,221

2,266

Total current assets

27,102

26,234

Property and equipment, net

852

891

Goodwill

72,293

76,593

Intangible assets, net

23,881

29,467

Other long-term assets

353

416

TOTAL ASSETS

$

124,481

$

133,601

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

3,733

$

2,523

Acquisition deposit for working capital guarantee

783

883

Accrued compensation

5,212

5,212

Short-term portion of term loan, net of discount

4,668

2,331

Subordinated debt

1,000

106

Other current liabilities

3,172

2,064

Total current liabilities

18,568

13,119

Deferred taxes

300

146

Revolving credit facility

14,215

11,925

Term loan, net of discount

36,029

40,253

Subordinated convertible debt

(includes $1,269 and $0, net of discount, respectively, due to related parties)

Preferred series B stock; authorized - 5,950 shares; issued and outstanding - 5,566 and 5,816 shares at September 30, 2019 and September 30, 2018, respectively; liquidation value of the preferred series B stock is approximately $27,050 and $28,255 at September 30, 2019 and September 30, 2018, respectively

27,551

28,788

Preferred series C stock; authorized - 3,000 shares; issued and outstanding - 60 and 0 shares at September 30, 2019 and September 30, 2018, respectively; liquidation value of the preferred series C stock is approximately $60 and $0 at September 30, 2019 and September 30, 2018, respectively

]]>GEE Group Announces Untimely Death of President George A. Bajaliahttps://ir.geegroup.com/news/detail/145/gee-group-announces-untimely-death-of-president-george-a-bajalia
Mon, 25 Nov 2019 06:30:00 -0500https://ir.geegroup.com/news/detail/145/gee-group-announces-untimely-death-of-president-george-a-bajaliaJACKSONVILLE, FL / ACCESSWIRE / November 25, 2019 / GEE Group Inc.(NYSE American:JOB) the "Company" or "GEE Group"), a provider of professional staffing services and solutions, today issued the following statement: "It is with great sadness and deep regret that we announce that George A. Bajalia, President and a member of the Company's Board of Directors, passed away unexpectedly this past weekend. The entire GEE Group family mourns this loss of a valued member of its senior leadership team. On behalf of our Board of Directors, management team and employees, we extend our deepest sympathies to George's wife and children, numerous relatives and many friends. George was doing one of the things he loved most, golfing with good friends, when he had a fatal heart attack. This unexpected and sudden loss of a man we held dear to all of us is a tragedy for his family as well as a plethora of friends and business associates. The entire GEE Group community lost a great friend and distinguished businessman, and we will miss his keen insight, intellect and leadership."

Derek E. Dewan, Chairman and CEO, issued the following statement: "No words can adequately express my deep despair at the loss of a stellar business executive and my longtime friend, George Bajalia. The loss is felt by all of us in the GEE Group Community. We will miss our colleague and we will never forget the great person that George Bajalia was and his many contributions to GEE Group. George's responsibilities and duties at the Company will be assumed by Alex Stuckey, CAO, Kim Thorpe, CFO and me."

About GEE Group Inc.

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will," "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma," "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

]]>GEE Group Named One of the Largest Staffing Firms in the Country in 2019 Reporthttps://ir.geegroup.com/news/detail/144/gee-group-named-one-of-the-largest-staffing-firms-in-the-country-in-2019-report
Thu, 15 Aug 2019 06:30:00 -0400https://ir.geegroup.com/news/detail/144/gee-group-named-one-of-the-largest-staffing-firms-in-the-country-in-2019-reportJACKSONVILLE, FL / ACCESSWIRE / August 15, 2019 / GEE Group Inc. (NYSE AMERICAN:JOB) (“the Company” or “GEE Group”), a provider of professional staffing services and human resource solutions, today announced that it has been ranked by Staffing Industry Analysts (SIA) as one of the Largest Staffing Firms in the United States in its 2019 annual report. “This year's report is the most comprehensive bottom-up analysis of the industry's competitive landscape and market share,” said Barry Asin, President of SIA. “The 157 companies in this year’s report generated a combined revenue of $90.2 billion and had an estimated 61% of the market.”

Chairman and CEO of GEE Group, Derek Dewan, commented on the Company being named to this list, “GEE Group is honored to be recognized by Staffing Industry Analysts (“SIA”) as one of the largest staffing firms in the United States. The accolade is attributable to the Company’s hard-working and dedicated employees. Our continued growth is driven by our commitment to serving our clients by providing quality staffing services in a variety of industries. The Company values the importance of providing strong customer service via its specialty staffing services throughout the United States.”

About GEE Group

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, SNI Banking and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," “pro forma”, "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Revenue for the 2019 fiscal third quarter was approximately $38.1 million and up sequentially in all business units over the immediately preceding quarter. Contract staffing services contributed approximately $33.2 million or approximately 87% of revenue and direct hire placement services contributed approximately $4.9 million or approximately 13% of revenue. Revenue from the combined professional contract and professional direct hire placement services, which is comprised of staffing and solutions in the information technology, engineering, healthcare and finance & accounting specialties, was approximately $32.7 million, and represents approximately 86% of total revenue for the 2019 fiscal third quarter.

Overall gross margin for the fiscal third quarter ended June 30, 2019 (including direct hire placement services) was approximately 35.6%. Professional contract staffing services gross margin (excluding direct hire placement services) for the 2019 fiscal third quarter was approximately 26.1%. The combined professional staffing services gross margin (including direct hire placement services) for the 2019 fiscal third quarter was approximately 37.2%. Industrial contract services gross margin for the 2019 fiscal third quarter was approximately 15.3% before the benefit of workers’ compensation insurance premium rebates from the Ohio Bureau of Workers’ Compensation and was approximately 26.8% including the rebates.

Selling, general and administrative expenses (SG&A) were approximately $11 million (including noncash stock compensation expense of approximately $531,000) and approximately 29% of revenue for the 2019 fiscal third quarter.

GAAP income from operations for the 2019 fiscal third quarter was approximately $536,000 before giving effect to a noncash goodwill impairment charge. GAAP loss from operations was approximately $3.8 million after giving effect to a noncash goodwill impairment charge of approximately $4.3 million.

GAAP net loss including the effect of a noncash goodwill impairment charge of approximately $4.3 million for the 2019 fiscal third quarter was approximately $6.8 million.

SEE DETAILED DISCUSSION BELOW FOR COMPARATIVE ANALYSIS TO THE PRIOR FISCAL YEAR THIRD QUARTER ENDED JUNE 30, 2018.

The aforementioned 2019 Fiscal Third Quarter Highlights and Financial Information should be read in conjunction with all of the financial and other information included in GEE Group’s Quarterly Reports filed with the SEC on Form 10-Q for the respective periods, Current Reports on Forms 8-K & 8-K/A and Information Statements on Schedules 14A & 14C filed with the SEC, and Annual Reports on Form 10-K filed with the SEC for the fiscal years ended September 30, 2018 and 2017. Also, the discussion of financial results in this press release and disclosures regarding the use of non-GAAP financial measures and related schedules attached hereto which reconcile non-GAAP financial measures to the financial information prescribed by GAAP are important to readers to help gain a more comprehensive understanding of the Company’s financial results. The non-GAAP financial measures and metrics of financial results or financial performance presented herein are not a substitute for the financial measures provided by GAAP and should not be considered as alternatives, replacements or superior to financial measures presented in accordance with GAAP. Financial information provided in this press release may consist of estimates, projections, pro forma data and certain assumptions that are considered forward looking statements and that are predictive or hypothetical in nature and depend on future events. The estimates and assumptions and related projected or pro forma financial results may not be realized nor are they guarantees of future performance.

2019 Third Quarter Financial Results: Detailed Comparative Discussion

The Company reported consolidated revenue of approximately $38.1 million for the fiscal third quarter ended June 30, 2019 compared to revenue of approximately $40.3 million for the fiscal third quarter ended June 30, 2018. Revenue for the June 30, 2019 fiscal third quarter was up sequentially as compared to the March 31, 2019 fiscal second quarter. Contract staffing services contributed approximately $33.2 million or approximately 87% of consolidated revenue and direct hire placement services contributed approximately $4.9 million or approximately 13% of consolidated revenue. This compares to contract staffing services revenue of approximately $33.9 million or approximately 84% of consolidated revenue and direct hire placement revenue of approximately $6.4 million or approximately 16% of consolidated revenue respectively for the 2018 fiscal third quarter. Contract staffing services revenue was virtually unchanged for the 2019 fiscal third quarter compared to the comparable prior year fiscal third quarter which was achieved with fewer production personnel through enhanced productivity. Direct hire placement revenue for the 2019 fiscal third quarter decreased by approximately $1.5 million over the comparable prior year fiscal third quarter. The decrease in direct hire placement was attributable to the residual effects of office consolidations, office closures and certain reductions in the core direct hire placement workforce that were undertaken by the Company to maximize productivity, reduce overall field costs and improve profitability. After right-sizing the business, GEE Group expects to selectively increase revenue-producing headcount in both contract staffing services and direct hire placement in key markets and in fast growing industry verticals for the remainder of the Company’s fiscal year ending September 30, 2019. The professional contract services revenue together with the direct hire placement revenue for the quarter (“the professional staffing division”) includes business from staff augmentation, permanent placement, statement of work (SOW) and other human resource solutions in the information technology, engineering, healthcare and finance and accounting higher-margin staffing specialties. GEE Group’s strategic plan contains both internal and acquisition growth objectives to increase revenue in the aforementioned higher margin professional services sectors of staffing, which represents approximately 86% of total revenue for the 2019 fiscal third quarter.

Industrial contract services revenue increased by approximately $300,000 for the 2019 fiscal third quarter to approximately $5.4 million from approximately $5.1 million reported for the 2018 fiscal third quarter. To accelerate growth and improve overall performance in the industrial services division, the Company has implemented an aggressive sales incentive program, streamlined branch operations and increased its focus on obtaining better pricing from new and existing accounts. GEE Group expects that the aforementioned actions coupled with new and expanded services offered to customers, will contribute to enhanced financial performance from that segment.

GEE Group’s overall staffing services gross profit margin, including direct hire placement services (recorded at 100% gross margin) for the 2019 fiscal third quarter was approximately 35.6% versus approximately 36.6% for the 2018 fiscal third quarter. The change in the overall gross margin from the comparable prior year fiscal third quarter was primarily due to greater direct placement services revenue in the 2018 fiscal third quarter and, to a lesser extent, an overall change in revenue mix for the 2019 fiscal third quarter. In the professional contract staffing services segment, the gross margin (excluding direct hire placement services) was approximately 26.1% for the 2019 fiscal third quarter unchanged as compared to the 2018 fiscal third quarter. The combined professional services gross margin (including direct hire placement services) was approximately 37.2% for the 2019 fiscal third quarter compared to approximately 40% for the 2018 fiscal third quarter. The change in the combined professional services gross margin from the prior year fiscal third quarter was attributable to a greater percentage of direct hire placement revenue (recorded at 100% gross margin) in the fiscal third quarter ended June 30, 2018.

The Company’s industrial staffing services gross margin for the 2019 fiscal third quarter was approximately 15.3% before giving effect to the estimated amounts of return premiums (“rebates”) from the Company’s Ohio Bureau Workers’ Compensation Program and approximately 26.8% after taking the workers’ compensation rebates into account; this compares to gross margin of approximately 16.4% for the industrial staffing services division for the 2018 fiscal third quarter.

GEE’s selling, general and administrative expenses (SG&A) for the fiscal third quarter ended June 30, 2019 decreased as a percentage of revenue and was approximately 29%, compared to approximately 30% of revenue for the fiscal third quarter ended June 30, 2018. The Company lowered SG&A, which includes commissions, sales and recruitment personnel, IT and office support, job boards, rent, administrative and other corporate costs, by approximately $1.0 million as compared to the prior year fiscal third quarter. SG&A included approximately $531,000 for the 2019 fiscal third quarter and approximately $399,000 for the 2018 fiscal third quarter of noncash stock-based compensation expense. The net decrease in SG&A was primarily related to strategic initiatives implemented by corporate and regional management to lower personnel costs by right-sizing the number of sales and recruitment full time employees (FTE’s) and related ancillary costs, consolidation of various office locations resulting in a reduction in rent and other expenses, integration and leverage from implementation of shared services, economies of scale gained from reduced pricing obtained from vendors, and by streamlining field operations. Management continues efforts to reduce SG&A as the Company obtains synergies from further back office consolidation and related efficiencies while focusing on selectively adding production personnel to accelerate revenue growth.

The Company classifies and reports costs incurred related to acquisition, integration and restructuring activities separately within its operating expenses; these principally include operating expenses associated with former closed and consolidated locations, personnel costs associated with eliminated positions, costs incurred related to acquisitions and associated legal and professional costs. These costs were approximately $564,000 in the 2019 fiscal third quarter as compared to approximately $514,000 for the 2018 fiscal third quarter.

GEE Group recorded GAAP income from operations of approximately $536,000 before giving effect to a noncash goodwill impairment charge for the fiscal third quarter ended June 30, 2019, compared to GAAP income from operations of approximately $595,000 for the fiscal third quarter ended June 30, 2018. GAAP loss from operations after giving effect to a noncash goodwill impairment charge of approximately $4.3 million was approximately $3.8 million. GAAP net loss for the fiscal third quarter ended June 30, 2019 including the noncash goodwill impairment charge of approximately $4.3 million was approximately $6.8 million compared to a GAAP net loss for the third quarter ended June 30, 2018 of approximately $1.9 million.

The Company’s adjusted earnings before interest, taxes, depreciation, amortization, noncash stock and stock option expenses, noncash goodwill impairment charge and acquisition, integration, and restructuring expenses (adjusted EBITDA, a non-GAAP financial measure) was approximately $3.1 million for the fiscal third quarter ended June 30, 2019, compared to approximately $3.0 million for the fiscal third quarter ended June 30, 2018.

GEE Group uses the above-mentioned non-GAAP financial measures internally to evaluate its operating performance and for planning purposes and believes that these are useful financial measures also used by investors .These non-GAAP financial measures are not a substitute for nor superior to financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP as reflected in the Form 10Q filed with the SEC for the respective periods should be read to obtain a comprehensive and thorough understanding of the Company’s financial results. The reconciliation of non-GAAP adjusted EBITDA to GAAP net income (net loss) is provided in schedules that are an integral part of this press release.

Management Comments

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, “GEE Group financial performance in the fiscal third quarter ended June 30, 2019 was on target with expectations generating approximately $3.1 million in adjusted EBITDA. Adjusted EBITDA for the nine months ended June 30, 2019 was approximately $8.8 million and we anticipate that GEE will deliver solid adjusted EBITDA for the remainder of the fiscal year. Revenue was up sequentially in each business unit over the prior sequential quarter. The Company continues to improve the productivity and efficiency of its sales and recruitment teams, increase its depth and breadth of service offerings, and selectively add revenue-producing personnel. In addition, optimizing the Company’s capital structure is a very high priority and our goal is to achieve this objective before the end of the year. These efforts are expected to benefit our “stakeholders” which include our dedicated hard-working employees, clients, associates and shareholders.”

Mr. Dewan added, “The demand environment for contingent labor remains strong and robust. With a favorable macroeconomic backdrop, continued low unemployment, and a tight labor market, GEE Group is well positioned to grow and deliver outstanding customer service with its enhanced menu of services, geographic footprint and talented employees.”

Use of Non-GAAP Financial Measures

To supplement the Company’s consolidated financial statements presented on a GAAP basis, the Company discloses certain financial information including non-GAAP adjusted EBITDA because management uses these supplemental non-GAAP financial measures to help evaluate performance period over period, to analyze the underlying operating trends and results in its business, to establish operational goals, to provide additional measures of operating performance, including using the information for internal planning relating to the Company’s ability to meet debt service, make capital expenditures and provide working capital needs. In addition, the Company believes investors already use these non-GAAP measures to monitor the Company’s performance. Non-GAAP adjusted EBITDA is defined by the Company as net income or net loss before interest, taxes, depreciation and amortization (EBITDA) plus non-cash stock option and stock-based compensation expenses, acquisition, integration and restructuring costs and noncash goodwill impairment charges. Non-GAAP adjusted EBITDA is not a term defined by GAAP and, as a result, the Company’s measure of non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above, however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss and income or loss from operations as reported for GAAP on the Consolidated Statements of Income, cash and cash flows as reported for GAAP in the Consolidated Balance Sheets or on the Consolidated Statements of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company’s financial statements prepared in accordance with GAAP included in GEE Group’s Form 10-Q and Form 10-K filed for the respective fiscal periods with the SEC. Reconciliations of GAAP net income or GAAP net loss to non-GAAP adjusted EBITDA are attached hereto.

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," “pro forma”, "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Preferred series B stock; authorized - 5,950 shares; issued and outstanding - 5,566 and 5,816 at June 30, 2019 and September 30, 2018, respectively; liquidation value of the preferred series B stock is approximately $27,050 and $28,255 at June 30, 2019 and September 30, 2018, respectively

27,551

28,788

Preferred series C stock; authorized - 3,000 shares; issued and outstanding - 20 and 0 at June 30, 2019 and September 30, 2018, respectively; liquidation value of the preferred series C stock is approximately $20 and $0 at June 30, 2019 and September 30, 2018, respectively

View source version on accesswire.com: https://www.accesswire.com/555950/GEE-Group-Announces-Results-for-the-Fiscal-2019-Third-Quarter]]>GEE Group Director and Renowned Economist Dr. Arthur B. Laffer to Receive the Presidential Medal of Freedom from President Trump Today in the Oval Officehttps://ir.geegroup.com/news/detail/142/gee-group-director-and-renowned-economist-dr-arthur-b-laffer-to-receive-the-presidential-medal-of-freedom-from-president-trump-today-in-the-oval-office
Wed, 19 Jun 2019 06:30:00 -0400https://ir.geegroup.com/news/detail/142/gee-group-director-and-renowned-economist-dr-arthur-b-laffer-to-receive-the-presidential-medal-of-freedom-from-president-trump-today-in-the-oval-officeJACKSONVILLE, FL / ACCESSWIRE / June 19, 2019 / GEE Group Inc. (NYSE American: JOB) ("the Company" or "GEE Group"), a provider of professional staffing services and human resource solutions, today announced that influential economist and GEE Group Board Member, Dr. Arthur B. Laffer, will receive the Presidential Medal of Freedom from President Donald J. Trump today in a private ceremony in the Oval Office of the White House. This prestigious award is the Nation's highest civilian honor bestowed upon individuals for especially meritorious contribution to the security or national interests of the United States, to world peace, or to cultural or other significant public or private endeavors.

Dr. Laffer is widely considered the "Father of Supply-Side Economics" and is one of the most famous economists in American history. He is best known for the "Laffer Curve" (first sketched on a napkin in 1974), which illustrates that tax cuts could actually increase tax revenue by spurring economic growth. This economic theory establishes the strong incentive effects of lower tax rates that spur investment, production, jobs, wages, economic growth and tax compliance.

Among the accomplishments in his distinguished career, Arthur Laffer served as the first Chief Economist of the Office of Management and Budget, a top economic advisor to President Ronald Reagan, and as a consultant to the Department of the Treasury and Department of Defense.

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, "We are most proud of Dr. Laffer as the recipient of this esteemed award given to him by President Trump for his outstanding public service and economic contributions to our country. GEE Group is fortunate to have him on the Board of Directors and appreciates the vast experience on business matters that he brings to the Company."

About GEE Group

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

]]>GEE Group Management and Directors Invest in Companyhttps://ir.geegroup.com/news/detail/141/gee-group-management-and-directors-invest-in-company
Thu, 16 May 2019 06:30:00 -0400https://ir.geegroup.com/news/detail/141/gee-group-management-and-directors-invest-in-companyEnter into Subscription Agreements to Purchase Securities for $2 Million

JACKSONVILLE, FL / ACCESSWIRE / May 16, 2019 / GEE Group Inc. (NYSE American: JOB) ("the Company" or "GEE Group"), a provider of professional staffing services and human resource solutions, today announced that members of its Senior Management and Board of Directors have entered into subscription agreements to purchase $2 million of newly issued "Convertible Subordinated Notes" from the Company. The purchase price has been received by GEE Group pending final closing.

GEE Group entered into "Subscription Agreements" with certain of its officers and directors to purchase in the aggregate principal amount of $2,000,000, 8% Convertible Subordinated Notes (the "Notes") of the Company in connection with an exempt offering of the Notes by GEE Group to accredited investors under "Regulation D" of the Securities Act of 1933. The Notes provide the holders with noncash, payment in kind ("PIK") interest of 8% payable in the form of a newly issued Series C 8% Cumulative Convertible Preferred Stock ("Series C Preferred Stock"). The Notes are convertible at the option of the holders into the Series C Preferred Stock which are convertible at the holder's option to GEE Group common stock, The Company anticipates that it will use the proceeds from the sale of the Notes for general corporate purposes and to fund its growth initiatives.

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, "Members of the Company's Senior Management and Board of Directors are bullish on GEE Group's future and continue to support the Company with both their time commitment and financially. We are all encouraged about the opportunities to grow GEE Group and capitalize on the talent and resources we have in the Company."

About GEE Group

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

]]>GEE Group Announces Results for the Fiscal 2019 Second Quarterhttps://ir.geegroup.com/news/detail/140/gee-group-announces-results-for-the-fiscal-2019-second-quarter
Wed, 15 May 2019 23:00:00 -0400https://ir.geegroup.com/news/detail/140/gee-group-announces-results-for-the-fiscal-2019-second-quarterJACKSONVILLE, FL / ACCESSWIRE / May 15, 2019 / GEE Group Inc. (NYSE American: JOB) ("the Company" or "GEE Group"), a provider of professional staffing services and human resource solutions, today announced results for the second quarter ended March 31, 2019.

2019 Fiscal Second Quarter Highlights

Revenue for the fiscal 2019 second quarter was approximately $36.2 million, down by approximately 9%, a decrease from the $39.9 million recorded in the second quarter of fiscal 2018. Contract staffing services contributed approximately $31.8 million or approximately 88% of revenue and direct placement services contributed approximately $4.4 million or approximately 12% of revenue. This compares to contract staffing services of approximately $34.5 million or approximately 87% of revenue and direct hire placement services of approximately $5.3 million or approximately 13% of revenue respectively for the same quarter of fiscal 2018. The decrease in contract staffing services revenue of approximately $2.7 million, or approximately 8%, for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 was impacted in part by a slower post holiday recovery in hiring in many markets and due to reductions in the temporary workforce requirements of a few key customers in the professional and industrial services divisions. Also contributing to the decline in revenue were higher than normal incidences of bad weather in the Company's mid-west and northeastern markets plus an additional holiday workday in the quarter ended March 31, 2019. In addition, revenue was impacted somewhat by the residual effects of office consolidations and office closures and other reductions in GEE Group's core workforce that were undertaken by the Company to maximize productivity, reduce overall field costs and improve profitability. Direct hire placement revenue for the three months ended March 31, 2019 decreased by approximately $1 million compared to the three months ended March 31, 2018. The decrease in direct hire placement revenue was mostly attributable to the various factors as set forth above affecting contract staffing services.

Revenue from the combined professional contract staffing and professional direct hire placement services, which is comprised of staffing and solutions in the information technology, engineering, healthcare, legal, and finance and accounting specialties, was approximately $31.1 million, and represents approximately 86% of total revenue for the 2019 fiscal second quarter.

Overall gross margin for the fiscal second quarter ended March 31, 2019 (including direct placement services) was approximately 32.4% compared to approximately 34.2% for the fiscal second quarter ended March 31, 2018. The change in the overall gross margin was primarily due to greater direct hire placement revenue (which is recorded at 100% gross margin) for the prior year fiscal second quarter. Professional contract staffing services gross margin (excluding direct placement services) for the 2019 fiscal second quarter was approximately 25.0% compared to approximately 25.8% for the 2018 fiscal second quarter. The change in professional contract staffing services gross margin was due to various factors including increased revenue from lower margin vendor management systems (VMS) and managed service providers (MSP) customers, and specialty revenue mix change. Industrial contract services gross margin for the 2019 fiscal second quarter was unchanged at approximately 13.6% when compared to approximately 13.6% for the 2018 fiscal second quarter.

Selling, general and administrative expenses (SG&A) declined by approximately $1.5 million dollars and was approximately 29% as a percentage of revenue for the 2019 fiscal second quarter, compared to approximately 30% for the 2018 fiscal second quarter.

GAAP loss from operations was approximately $821,000 for the 2019 fiscal second quarter, compared to GAAP income from operations of approximately $15,000 for the comparable 2018 fiscal second quarter.

GAAP net loss for the 2019 fiscal second quarter was approximately $3.9 million, compared to GAAP net loss of approximately $2.9 million for the comparable 2018 fiscal second quarter.

Higher interest expense which included the issuance of stock for interest payments for the 2019 fiscal second quarter contributed in part to the the increase in GAAP net loss as compared with the fiscal second quarter of 2018.

Adjusted earnings before interest, taxes, depreciation, amortization, noncash stock and stock option expenses, acquisition, integration and restructuring expenses (adjusted EBITDA, a non-GAAP financial measure) for the 2019 fiscal second quarter was approximately $ 1.90 million vs. approximately $2.02 million for the comparable prior fiscal year second quarter (see non-GAAP adjusted EBITDA reconciliation to GAAP net income (net loss) attached to this press release).

Select GAAP financial information: GAAP interest expense of approximately $3.1 million for the 2019 fiscal second quarter included noncash payments in kind ("PIK") of the Company's common stock of approximately $401,500. GAAP current liabilities of approximately $13.4 million includes an acquisition deposit for a working capital guarantee of $883,000.

Revolving Credit Facility and Term Loan: GEE Group amended its Revolving Credit, Term Loan and Security Agreement effective as of May 15, 2019. The Company believes the loan modifications are beneficial, provide more financial flexibility, improve cash flow and will better meet its needs as it executes its growth strategy. The amendment includes substantially reduced future principal payments through March 31, 2020, greater flexibility on loan covenants and other changes that GEE Group views as favorable. See Form 10Q for the period ended March 31, 2019 filed with the SEC for a more complete description and a complete copy of the amendment.

$2,000,000 Sale of Convertible Subordinated Notes: On May 15, 2019, GEE Group entered into "Subscription Agreements" with certain officers and directors to purchase in the aggregate principal amount of $2,000,000, 8% Convertible Subordinated Notes (the "Notes") of the Company in connection with an exempt offering of the Notes by the Company under "Regulation D" of the Securities Act of 1933. The Notes will carry payment in kind interest ("PIK") payable in a Series C 8% Cumulative Convertible Preferred Stock ("Series C Preferred Stock"). The Notes are convertible at the option of the holders into Series C Preferred Stock which in turn are convertible at the holder's option to GEE Group common stock. The Company anticipates that it will use the proceeds from the sale of the Notes for general corporate purposes and to fund its growth initiatives.

The aforementioned 2019 Fiscal Second Quarter Highlights and Financial Information should be read in conjunction with all of the financial and other information included in GEE Group's Quarterly Reports filed with the SEC on Form 10Q for the respective periods, Current Reports on Forms 8K & 8K/A and Information Statements on Schedules 14A & 14C filed with the SEC, and Annual Reports on Form 10K filed with the SEC for the fiscal years ended in 2016, 2017, and 2018. Also, the discussion of financial results in this press release and disclosures regarding the use of non-GAAP financial measures and related schedules attached hereto which reconcile non-GAAP financial measures to the financial information prescribed by GAAP are important to readers to help gain a more comprehensive understanding of the Company's financial results. The non-GAAP financial measures and metrics of financial results or financial performance presented herein are not a substitute for the financial measures provided by GAAP and should not be considered as alternatives, replacements or superior to financial measures presented in accordance with GAAP. Financial information provided in this press release may consist of estimates, projections and certain assumptions that are considered forward looking statements and that are predictive in nature and depend on future events. The estimates and assumptions and related projected financial results may not be realized nor are they guarantees of future performance.

GEE Group uses the above-mentioned non-GAAP financial measures internally to evaluate its operating performance and for planning purposes and believes that these are useful financial measures also used by investors .These non-GAAP financial measures are not a substitute for nor superior to financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP as reflected in the Form 10Q filed with the SEC for the respective periods should be read to obtain a comprehensive and thorough understanding of the Company's financial results. The reconciliation of non-GAAP adjusted EBITDA to GAAP net income (net loss) is provided in a schedule that is a part of this press release.

Management Comments

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, "We are encouraged about the increased use of contingent labor in the 'gig economy'. Secular changes in the workforce, together with a very tight domestic job market, are driving the demand for all of our staffing services, which have picked up since the fiscal 2019 second quarter. The Company continues to focus on internal growth and increasing market share through targeted sales and marketing efforts directed to existing and new customers. Additionally, GEE Group will capitalize on opportunities to selectively increase revenue-producing headcount in key markets with emphasis on its specialized industry verticals, including information technology, finance and accounting, engineering and healthcare. The Company's internal growth efforts will be augmented by strategic acquisitions.

Mr. Dewan added, "GEE's enhanced service capability in providing professional staffing services and human resource solutions, coupled with its extended geographic footprint, will help the Company achieve sustained organic growth in revenue and profitability while delivering exceptional customer service and rewarding careers for our employees and associates."

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company discloses certain financial information including non-GAAP adjusted EBITDA because management uses these supplemental non-GAAP financial measures to help evaluate performance period over period, to analyze the underlying trends in its business, to establish operational goals, to provide additional measures of operating performance, including using the information for internal planning relating to the Company's ability to meet debt service, make capital expenditures and provide working capital needs. In addition, the Company believes investors already use these non-GAAP measures to monitor the Company's performance. Non-GAAP adjusted EBITDA is defined by the Company as net income or net loss before interest, taxes, depreciation and amortization (EBITDA) plus non-cash stock option and stock-based compensation expenses, the change in contingent consideration and acquisition, integration and restructuring costs. Non-GAAP adjusted EBITDA is not a term defined by GAAP and, as a result, the Company's measure of non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above, however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss and income or loss from operations as reported for GAAP on the Consolidated Statements of Income, cash and cash flows as reported for GAAP on the Consolidated Statement of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company's financial statements prepared in accordance with GAAP included in GEE Group's Form 10Q and Form 10K filed for the respective fiscal periods with the SEC. Reconciliation of GAAP net income or GAAP net loss to non-GAAP adjusted EBITDA is attached hereto.

Preferred series B stock; authorized - 5,950 shares; issued and outstanding - 5,566 and 5,816 at March 31, 2019 and September 30, 2018, respectively; liquidation value of the preferred series B stock is approximately $27,050 and $28,255 at March 31, 2019 and September 30, 2018, respectively

27,551

28,788

SHAREHOLDERS' EQUITY

Common stock, no-par value; authorized - 200,000 shares; issued and

outstanding - 11,721 shares at March 31, 2019 and

10,783 shares at September 30, 2018, respectively

-

-

Additional paid in capital

47,291

44,120

Accumulated deficit

(30,360

)

(23,018

)

Total shareholders' equity

16,931

21,102

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

129,599

$

133,601

About GEE Group

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

]]>GEE Group to present at 31ST Annual ROTH Investor Conference in Orange County, Californiahttps://ir.geegroup.com/news/detail/139/gee-group-to-present-at-31st-annual-roth-investor-conference-in-orange-county-california
Tue, 12 Mar 2019 06:30:00 -0400https://ir.geegroup.com/news/detail/139/gee-group-to-present-at-31st-annual-roth-investor-conference-in-orange-county-californiaJACKSONVILLE, FL / ACCESSWIRE / March 12, 2019 / GEE Group Inc. (NYSE American: JOB) ("the Company" or "GEE Group"), a provider of professional staffing services and solutions, today announced that management will participate in the 31st Annual ROTH Conference being held at The Ritz Carlton, Laguna Niguel in Orange County, California, on March 17-19, 2019.

The conference will feature presentations and industry panels from public and private companies across a variety of sectors. Last year, the ROTH Conference hosted close to 550 participating companies and more than 4,700 attendees, including institutional investors, analysts, family offices and high net worth investors.

GEE Group Chairman and Chief Executive Officer, Derek E. Dewan, will participate in one-on-one meetings with institutional analysts and investors throughout the conference. He will present as part of a staffing industry panel on current employment trends on March 18th at 12:30 pm Pacific Time.

Registration is mandatory for conference participation. For more information on the conference, or to schedule a meeting, please contact your ROTH representative, or email oneononerequests@roth.com.

About GEE Group

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," "pro forma", "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Revenue for the fiscal 2019 first quarter was approximately $38.5 million compared to the first quarter of fiscal 2018 amount of approximately $45.2 million. Contract staffing services contributed approximately $34.0 million or approximately 88.2% of revenue and direct placement services contributed approximately $4.5 million or approximately 11.8% of revenue. This compares to contract staffing services of approximately $39.5 million or approximately 87.2% of revenue and direct placement services of approximately $5.8 million or approximately 12.8% of revenue respectively for the same quarter of fiscal 2018. Revenue from the combined professional contract and professional direct placement services which is comprised of staffing and solutions in the information technology, engineering, healthcare and finance and accounting specialties was approximately $32.9 million and represents approximately 85.4% of total revenue for the 2019 fiscal first quarter compared to approximately $39.4 million or approximately 87.0% of total revenue for the 2018 fiscal first quarter. The overall decrease in contract staffing services and direct placement revenue in the first quarter of fiscal 2019 vs. the first quarter of fiscal 2018 was attributable to many factors including inclement weather, winter holidays falling mid-week and a natural result of the impact of strategic initiatives instituted by management to maximize productivity, reduce overall field costs and improve profitability. The actions taken by the Company which had an impact on the 2019 first quarter revenue included a reduction in the number of unproductive or underperforming full time personnel including recruiters, account representatives and sales professionals together with the closure or consolidation of certain offices.

Overall gross margin for the fiscal first quarter ended December 31, 2018 (including direct placement services) was approximately 33% compared to approximately 34.9% for the fiscal first quarter ended December 31, 2017. The change in the overall gross margin was primarily due to a lower percentage of direct placement services revenue (which is recorded at 100% gross margin) in the 2019 fiscal first quarter relative to total revenue. Professional contract staffing services gross margin (excluding direct placement services) for the 2019 fiscal first quarter was approximately 26.1% compared to approximately 27.0% for the 2018 fiscal first quarter. The change in professional contract staffing services gross margin was primarily due to revenue mix change resulting from a larger percentage of revenue contributed from Vendor Management Systems (“VMS”), Managed Service Providers (“MSP”), Master Service Agreements (“MSA”) and other volume corporate accounts all of which typically have lower gross margin, but also lower selling, general and administrative costs resulting in good profitability. Industrial contract services gross margin for the 2019 fiscal first quarter was approximately 13.9% compared to approximately 15.6% for the 2018 fiscal first quarter. The change in industrial contract services gross margin was primarily due to lower margin account business that occurred in the three months ended December 31, 2018.

Selling, general and administrative expenses (SG&A) declined as a percentage of revenue for the 2019 fiscal first quarter and was approximately 26.1% compared to approximately 28.2% of revenue for the 2018 fiscal first quarter; a decrease of approximately 2.1 percentage points. SG&A was approximately $10.1 million for the 2019 fiscal first quarter and decreased by approximately $2.7 million as compared to $12.8 million for the 2018 fiscal first quarter. Included in SG&A were non-cash stock-based compensation expenses of $581,000 for the 2019 fiscal first quarter and $293,000 for the 2018 fiscal first quarter. The Company’s strategic cost reduction initiatives, the realization of economies of scale and reduced pricing from vendors primarily contributed to the reduction in SG&A.

GAAP income from operations for the 2019 fiscal first quarter was approximately $19,000 compared to GAAP income from operations of approximately $1.5 million for the comparable 2018 fiscal first quarter. Income from operations for the fiscal first quarter of 2019 included approximately $1.1 million of increased acquisition, integration and restructuring expenses as compared to the fiscal first quarter of 2018.

GAAP net loss for the 2019 fiscal first quarter was approximately $3.5 million compared to GAAP net loss of approximately $1.8 million for the comparable 2018 fiscal first quarter.

Adjusted earnings before interest, taxes, depreciation, amortization, noncash stock and stock option expenses and acquisition, merger, integration and restructuring expenses and gain on asset disposal (adjusted EBITDA, a non-GAAP financial measure) for the 2019 fiscal first quarter ended December 31, 2018 was approximately $3.3 million vs. approximately $3.3 million for the comparable prior year fiscal first quarter (see non-GAAP adjusted EBITDA reconciliations to GAAP net income (net loss) attached to this press release).

GAAP net working capital was approximately $11.5 million as of December 31, 2018.

The aforementioned 2019 Fiscal First Quarter Highlights should be read in conjunction with all of the financial and other information included in GEE Group’s Quarterly Reports filed with the SEC on Form 10Q for the respective periods, Current Reports on Forms 8K & 8K/A and Information Statements on Schedules 14A & 14C filed with the SEC, and Annual Reports on Form 10K filed with the SEC for the fiscal years ended in 2016, 2017, and 2018; and, the discussion of financial results in this press release and the use of non-GAAP financial measures and the related schedules attached hereto which reconcile non-GAAP financial measures and financial information to that prescribed by GAAP. These non-GAAP financial measures and metrics of financial results or financial performance are not a substitute for the financial measures provided by GAAP and should not be considered as alternatives, substitutes or superior to financial measures presented in accordance with GAAP. Financial information provided in this press release may consist of estimates, projections and certain assumptions that are considered forward looking statements and that are predictive in nature, depend on future events and the projected financial results may not be realized nor are they guarantees of future performance.

2019 First Quarter Financial Results: Discussion

The Company reported consolidated revenue of approximately $38.5 million for the fiscal first quarter ended December 31, 2018 as compared to revenue of approximately $45.2 million for the fiscal first quarter ended December 31, 2017. Total revenue for the 2019 fiscal first quarter was impacted by the implementation of GEE Group’s strategic plan to improve profitability which resulted in the planned reduction of unproductive and underperforming sales and recruitment full time personnel and consolidation or closure of certain offices. Also, revenue was negatively impacted in the 2019 fiscal first quarter to some extent by holidays falling mid-week, fewer billing days in the quarter and severe winter weather in some markets. Contract staffing services contributed approximately $34.0 million or approximately 88.2% of consolidated revenue and direct placement services contributed approximately $4.5 million or approximately 11.8% of consolidated revenue for the 2019 fiscal first quarter versus approximately $39.5 million or approximately 87.2% of consolidated revenue and approximately $5.8 million or approximately 12.8% of consolidated revenue respectively for the 2018 fiscal first quarter. Industrial contract services revenue for the 2019 fiscal first quarter was approximately $5.6 million as compared to approximately $5.9 million recorded in the 2018 fiscal first quarter.

GEE Group’s overall staffing services gross profit margin including direct placement services (recorded at 100% gross margin) for the 2019 fiscal first quarter was approximately 33% versus approximately 34.9% for the comparable 2018 prior year fiscal first quarter. The change in the overall gross margin in the 2019 fiscal first quarter from the comparable prior year fiscal first quarter was due to several factors including a lower percentage of direct placement revenue (which is recorded at 100% gross margin) and a greater percentage of VMS, MSP, MSA and other volume corporate business in the professional contract staffing services division. In the professional contract staffing services segment, the gross margin (excluding direct placement services) was approximately 26.1% for the 2019 fiscal first quarter compared to approximately 27.0 % for the 2018 fiscal first quarter. The change in professional contract staffing services gross margin was primarily due to specialty revenue mix composition (information technology, finance and accounting, engineering and healthcare) and a greater percentage of revenue contributed from VMS, MSP, MSA and other volume corporate accounts. The Company’s industrial staffing services gross margin for the 2019 fiscal first quarter was approximately 13.9% versus approximately 15.6% for the 2018 fiscal first quarter. The difference in industrial services gross margin in the 2019 fiscal first quarter when compared to the 2018 fiscal first quarter was primarily attributable to lower margin business recorded in the fiscal first quarter of 2019.

The Company’s selling, general and administrative expenses (SG&A) for the fiscal first quarter ended December 31, 2018 decreased as a percentage of revenue and was approximately 26.1% compared to approximately 28.2% of revenue for the fiscal first quarter ended December 31, 2017. The decrease of approximately $2.7 million in SG&A in the 2019 fiscal first quarter over the comparable prior year fiscal first quarter is primarily attributable to the implementation of GEE Group’s strategic profitability improvement plan which included a reduction of underperforming and unproductive full time personnel and actions taken by management to obtain additional operational efficiencies, maximize productivity and realize economies of scale.

GEE Group recorded GAAP income from operations of approximately $19,000 for the fiscal first quarter ended December 31, 2018 compared to GAAP income from operations of approximately $1.5 million for the fiscal first quarter ended December 31, 2017. GAAP income from operations for the 2019 fiscal first quarter was impacted by an increase in acquisition, integration and restructuring expenses of approximately $1.1 million over that recorded in the 2018 fiscal first quarter. GAAP net loss for the fiscal first quarter ended December 31, 2018 was approximately $3.5 million compared to GAAP net loss for the fiscal first quarter ended December 31, 2017 of approximately $1.8 million.

The Company’s adjusted earnings before interest, taxes, depreciation, amortization, noncash stock and stock option expenses and acquisition, integration, and restructuring expenses, gain on asset disposal (adjusted EBITDA, a non-GAAP financial measure) was approximately $3.3 million for the fiscal first quarter ended December 31,2018 compared to approximately $3.3 million for the fiscal first quarter ended December 31, 2017 (See non-GAAP adjusted EBITDA reconciliations to GAAP net income (net loss) attached to this press release).

GEE Group uses the above-mentioned non-GAAP financial measures internally to evaluate its operating performance and for planning purposes and believes that these are useful financial measures also used by investors. These non-GAAP financial measures are not a substitute for nor superior to financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP as reflected in the Form 10Q filed with the SEC for the respective periods should be read to obtain a comprehensive and thorough understanding of the Company’s financial results. The reconciliations of non-GAAP adjusted EBITDA to GAAP net income (net loss) are provided in schedules that are a part of this press release.

Management Comments

Derek E. Dewan, Chairman and Chief Executive Officer of GEE Group, commented, “GEE’s performance improvement plan implemented in the past year had a positive impact on the Company’s financial performance and contributed to solid adjusted EBITDA for the fiscal first quarter ended December 31, 2018. Our dedicated and hardworking employees have made concerted efforts to improve their productivity while providing outstanding service to our customers. GEE’s strategy for the remainder of this fiscal year includes the selective addition of sales and delivery talent, in addition to beefing up our recruiting capabilities to help us continue to gain market share and increase GEE Group’s organic revenue growth and profitability. We plan to bolster our balance sheet and continue to evaluate and make strategic acquisitions that are complimentary to our business, which will be accretive to earnings while adding extensively to our service delivery network.”

Mr. Dewan added, “We anticipate that the tight labor market with low unemployment will continue for the rest of this year. There continues to be strong demand from our customers for IT, accounting, finance, engineering, healthcare and other highly skilled professional workers and we are well equipped to recruit and deploy the best talent to fulfill our customers needs. Secular change in employment is resulting in greater usage of a flexible on-demand workforce to satisfy personnel needs in corporate America; this creates favorable conditions for our business and the staffing industry as a whole.”

Use of Non-GAAP Financial Measures

To supplement the Company’s consolidated financial statements presented on a GAAP basis, the Company discloses certain financial information including non-GAAP adjusted EBITDA because management uses these supplemental non-GAAP financial measures to help evaluate performance period over period, to analyze the underlying trends in its business, to establish operational goals, to provide additional measures of operating performance, including using the information for internal planning relating to the Company’s ability to meet debt service, make capital expenditures and provide working capital needs. In addition, the Company believes investors already use these non-GAAP measures to monitor the Company’s performance. Non-GAAP adjusted EBITDA is defined by the Company as net income or net loss before interest, taxes, depreciation and amortization (EBITDA) plus non-cash stock option and stock-based compensation expenses and acquisition, integration and restructuring costs, change in contingent consideration and loss on disposal of assets. Non-GAAP adjusted EBITDA is not a term defined by GAAP and, as a result, the Company’s measure of non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above, however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss as reported for GAAP on the Consolidated Statements of Income, cash and cash flows as reported for GAAP on the Consolidated Statement of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company’s financial statements prepared in accordance with GAAP included in GEE Group’s Form 10Q and Form 10K filed for the respective fiscal periods with the SEC. Reconciliations of GAAP net income or GAAP net loss to non-GAAP adjusted EBITDA are attached hereto.

GEE Group Inc. is a provider of specialized staffing solutions and is the successor to employment offices doing business since 1893. The Company operates in two industry segments, providing professional staffing services and solutions in the information technology, engineering, finance and accounting specialties and commercial staffing services through the names of Access Data Consulting, Agile Resources, Ashley Ellis, General Employment, Omni-One, Paladin Consulting and Triad. Also, in the healthcare sector, GEE Group, through its Scribe Solutions brand, staffs medical scribes who assist physicians in emergency departments of hospitals and in medical practices by providing required documentation for patient care in connection with electronic medical records (EMR). Additionally, the Company provides contract and direct hire professional staffing services through the following SNI brands: Accounting Now®, SNI Technology®, Legal Now®, SNI Financial®, Staffing Now®, SNI Energy®, and SNI Certes.

Forward-Looking Statements

In addition to historical information, this press release contains statements relating to the Company's future results (including certain projections, pro forma financial information, and business trends) that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. The statements made in this press release that are not historical facts are forward-looking statements that are predictive in nature and depend upon or refer to future events. Such forward-looking statements often contain, or are prefaced by, words such as "will", "may," "plans," "expects," "anticipates," "projects," "predicts," “pro forma”, "estimates," "aims," "believes," "hopes," "potential," "intends," "suggests," "appears," "seeks," or variations of such words or similar words and expressions. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and, consequently, as a result of a number of factors, the Company's actual results could differ materially from those expressed or implied by such forward-looking statements. Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation: (i) the loss, default or bankruptcy of one or more customers; (ii) changes in general, regional, national or international economic conditions; (iii) an act of war or terrorism or cyber security breach that disrupts business; (iv) changes in the law and regulations; (v) the effect of liabilities and other claims asserted against the Company including the failure to repay indebtedness or comply with lender covenants; (vi) changes in the size and nature of the Company's competition; (vii) the loss of one or more key executives; (viii) increased credit risk from customers; (ix) the Company's failure to grow internally or by acquisition or the failure to successfully integrate acquisitions; (x) the Company's failure to improve operating margins and realize cost efficiencies and economies of scale; (xi) the Company's failure to attract, hire and retain quality recruiters, account managers and salesmen; (xii) the Company's failure to recruit qualified candidates to place at customers for contract or full-time hire; and such other factors as set forth under the heading "Forward-Looking Statements" in the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (SEC). More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to publicly update, revise or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Preferred series B stock; authorized - 5,950 shares; issued and outstanding - 5,566 and 5,816 at December 31, 2018 and September 30, 2018, respectively; liquidation value of the preferred series B stock is approximately $27,050 and $28,255 at December 31, 2018 and September 30, 2018, respectively